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Should You Have the House Inspected Before It Is Listed For Sale?

Home Inspections have clearly made life a lot easier for buyers. Whenever I hear a real estate agent use the words Caveat Emptor, I want to scream (and often do). We are no longer in the Age of Caveat Emptor when it comes to buying and selling real estate.

There is a process of Due Diligence, and merely relying on Seller Disclosure is not what a buyer should be doing. It is not reasonable for a buyer to expect that every seller really knows his property as well as the buyer needs to know it before buying it.

I am a firm believer in the buyer getting their own inspections done. I think the home inspection is part of the process from contract to close, and not something the seller should do before they put their home on market.

So I have two questions for you:

1) Do you recommend that SELLERS have a home inspection done prior to putting their home on the market?

2) If your Buyer Client purchases a home where the Seller hands them this Home Inspection, does the buyer usually hire a second inspector of their own in addition?

Posted by ARDELL DellaLoggia on 05/28/2007 09:15 AM

Comments (41)

home inspection

41 Comments on Should You Have the House Inspected Before It Is Listed For Sale?

MAY

2007

I had a 1953 home inspected prior to sale, you know the peace of mind thing, so far I cannot tell if it has made a difference. The pricing on the home has gone from 349900 to 344900 to 299900

I am looking for someone to bite.

What did you do with the inspection? Did the seller fix everything or do you have the inspection sitting in the house or did you put everything in the inspection on the Seller Disclosure Form?

How do you convey the info in the inspection to the people looking at the property?

I think it really depends on the owners knowledge of anything being wrong with the house. If the owner has any knowledge that something could be wrong they should have a home inspection done. The buyers will probably want to order their own, but having one already done cuts down on the chance that there may be any unforseen problems discovered by the buyers inspection. Less surprises in the middle of escrow the better. Happy Memorial Day and Happy Selling.

Thomas,

Have your seller's done them? Do you make everything in the inspection available on the seller disclosure? Do you have the seller attach the inspection to the seller disclosure?

They can't just stick it in a drawer and forget about it, can they? That's my concern for seller's having inspections. Isn't it TMI and bad timing to point out every little tiny problem up front? And once they know everything, and the inspector could be wrong, how does that expand the sellers duty to disclose?

Seems like opening a can of worms to me.

The pre-listing inspections are becoming the inspection of choice for the honest reputable realtor's and sellers in my area. They use it as an awesome marketing tool.

Facing the Reality

90% of home buyers will hire a home inspector to inspect your home before they buy. Most offers include a contingency clause, which states, that the offer is subject to a buyer's property inspection. The buyer's inspector will most likely find defects that you may or may not be aware of. In most cases home sellers have to rush to have these repairs made; closing dates are missed, and buyers can walk away from the contract; or sometimes it forces you to either lower your asking price or credit the buyer for repair costs. You can also spend more money on rush repairs without having the time to find a more competitive bid and a qualified contractor. It can be stressful to learn that, at the last minute, your home will not close on time or not at all. By having your home pre-inspected, you are saved time, money and stress in the long run. More and more home sellers are having pre-inspections performed because of the value they offer.

This is just a small part of the advantages of having a home pre-inspected.

Ardell,

I completely agree with you. Having a home inspection done before the sale is a waste of money. Most buyers are a little bit hesitant if not out and out suspicious of a Seller that provides them with a home inspection report.

In addition many Realtors have a preferred list of inspectors that they are familiar with and would also be suspicious of an inspection from a company they were not familiar with.

I have at times had a property that for one reason or other did not sell with the first buyer. If was amazing to look at the 3 reports offered by 3 different companies and how those reports varied.

If you had a report, I would definitely take it but would still insist that my buyer got their own.

Ardell:

I had a unique situation where the buyer did inspections prior to making an offer, which I wrote about in my blog.

Had that buyer not purchased the property after inspections I would have recommended putting a copy of the inspection report with the seller's disclosure.

On the other hand if there is a pre-listing inspection done by the sellers, my company provided us with a Pre-Inspection Report Notice and Disclaimer that is following.

Pre-Inspection Report

Notice and Disclaimer

________________________________________

This pre-inspection report was conducted and provided exclusively for the benefit of the Sellers of the relevant real property and for their sole and exclusive benefit. This inspection report is not valid for use by, or reliance on, by any third party. Sellers,(Real Estate Companies Name Inserted here)and its individual sales agents are not responsible for any reliance by you or any other third party on the inspection report and the results contained therein. Neither this inspection report, nor the findings set forth therein, are designed for, nor should be used as, a basis for establishing or evidencing the value of the real property by buyers or lenders or for any other purpose for which a third-party may rely on the inspection report.

Ardell,

First... the only way I recommend it to be inspected before putting it on the market is if the seller thinks there will be a problem during the inspection..if not then they do not want to spend the money,they would rather the buyer inspector do what they are paid for and then go over the report. Not many buyers are comfortable using a sellers report. I would always recommend to do their own inspection. All inspectors are different in their findings. I did have a listing that was a condo conversion...we asked the buyers agent when they planned on an inspection..they felt because it was a renovated unit that they would bypass it. Well i still disagreed even though I was the listing agent. The buyers closed moved in and the next day they took showers and flooded inside the walls. The Realtors was asking me to aks the seller to compensate. Stupid move on the buyer agent..they did not even do a final walk-through yet they are asking for repair money? The seller was told by the developer that all permits were up to code and that they needed to go to the developer for that issue. The seller did their own inspection but the buyer did not use it as it was done by the sellr himslef.The other agent was too lazy to complete their task in the transaction. I do not care what the cost is...get it inspected as is your buyers right to in the contract.

Ardell-

I pay for pre-listing inspections on my listings. I have a very good inspector who I know will catch almost everything.

I think it gives the seller peace of mind, knowing that nothing huge will show up on the buyer's inspection. No surprises like mold in the attic or a faulty foundation. If those things are found we can fix them with a contractor of our choosing, on our timeline.

In our small community, we know most of the inspectors. I would always suggest a buyer (mine or someone elses) get an inspection of their own. However, if it was one of my top two inspectors, I wouldn't be too worried if they used an existing inspection.

One thing that does present a problem is when the pre-listing inspection presents a laundry list of problems and the seller wants to list the property right away and work on the problems as they get to them. The inspection doesn't really help buyers because they see this long list of promises and problems. It is better to solve the problems BEFORE it hits the market.

ARDELL - In my ideal real estate world, the seller would obtain a pre-listing inspection, and it would become an attachment to the seller's Transfer Disclosure Statement (along with the 2 dozen or so addendums we already attach to it). The main purpose of that pre-listing inspection would simply be risk management in the form of additional disclosure.

Then when a buyer came along, the buyer would obtain their own independent inspection, and negotiate for repairs or credits the same way they usually do, based on their own inspection, not on the seller's disclosure. And the seller may be a little more ready to consider or refute any requests from the buyer, since the seller already has an idea what's what from their own pre-listing inspection report.

Alas, the real world and the ideal world are not always the same........

The advantages to your real estate business and your home selling clients are many:

•· You can recommend a certified NACHI inspector, to do the inspection as opposed to being at the mercy of buyer's choices in inspectors.

•· Buyers will have more confidence in placing an offer, if they feel you are representing the true condition of the property, by a third party unbiased opinion.

•· Your sellers can schedule the inspections at their convenience, direct with me, with little effort on your part.

•· Your sellers can assist me during the inspections, something normally not done during buyer's inspections.

•· Your sellers can have me correct any misstatements in my reports before I generate them.

•· My reports help sellers see their homes through the eyes of a critical, third-party, thus making sellers more realistic about asking price.

•· I will alert you to any immediate safety issues I find before other agents and potential buyers tour the homes I inspect.

•· Repairs made ahead of time might make your listings show better.

•· My reports provide third-party, unbiased opinions to offer to potential buyers.

•· My reports can be used as marketing tools to help sell the homes.

•· My reports might relieve prospective buyer's unfounded suspicions, before they walk away.

•· Seller inspections eliminate buyer's remorse that sometimes occurs just after an inspection.

•· Seller inspections reduce the need for negotiations and 11th-hour renegotiations.

•· Seller inspections relieve you of having to hurriedly procure repair estimates or schedule repairs.

•· My reports might encourage buyers to waive their inspection contingencies.

•· Your deals are less likely to fall apart the way they often do when buyer's inspections unexpectedly reveal problems, last minute.

•· My reports provide full-disclosure protection from future legal claims.

Buyer does their own...then no conflict.

Geordie,

After you fix all fo the problems, do you still disclose them to the buyer and show how the problem was "fixed"? Does the buyer get the inspection attached to the Seller Disclosure, and if so, when? If you put that out for all buyers to see before there is an offer, has it scared any of them away ever?

Thanks for all the comments everyone, keep them coming.

There is no right or wrong answer to this question, of course.

Getting lots of opinions will help consumers choose which route to take.

Robert,

Are you really suggesting that 98% of the Realtors in this Country are NOT "honest and reputable" IF they don't recommend that the seller do an inspection? Clearly you are a ...

ARDELL, I don't normally suggest my Sellers have an inspection done unless I feel there may be some issues. If they do have an inspection it really depends on how extensive the repair issues are whether or not I suggest we fix them in advance of listing. I do not offer the inspection to the Buyer until after we are under contract or in advance if they have concerns about the property.

In Florida we have to disclose "anything that materially affects the value of the property that the buyer can't readily see" Also, we have to disclose recent roof and termite inspections. So if they had a broken door knob and they fixed it there is no reason for us to disclose that. So I don't feel it necessary to attach the complete inspection report to the property disclosures. Unless, it's a plus. We may want to show the buyer we had it inspected and fixed all the nit picking items.

However we decide to handle it, the Buyer should always have an independent inspection done. A prelisting inspection is for the seller's benefit not the buyer's.

Ardell- I am all about disclosure. I provide the inspection in a packet I leave at the home when buyers come to view the home or I give it to them with the disclosure when I show the home. If I have a good product to sell and nothing to hide, disclosure costs me nothing.

Have I had buyers scared off because of the inspection? Yes. Were they going to buy anyway? Were they just lookers? Would they have been difficult and needy during the inspection period?

My favorite was a couple who asked their agent "If this is what they found on the inspection, what else is wrong with the house?"

When I work as a buyers agent, I wish more sellers had pre-listing inspections.

Geordie: "Have I had buyers scared off because of the inspection? Yes."

My question is what part of "representing the sellers" includes scaring away potential buyers? Wouldn't it be better for the buyers to do their own inspection? Isn't all that info in sheets of paper a bit overwhelming without hearing the inspector's voice talk through both minor and major points and maintenance items?

I think its a good idea to have the home inspected at, before, or soon after, listing the home but some sellers do not want the expense.

The majority of buyers will order their own anyways.

ARDELL, I'm sure we all wish ALL sellers would have pre-listing inspections. Home inspections and this particular issue was a point of discussion in one of my recent blog articles.

I brought this subject up as a result of a question on one of my blog articles from a consumer.

Given a recent change in Washington Case Law, noted in a link in my comment about 6-7 comments down, buyer's need to be more careful about not having their own home inspections, and sellers need to be more careful about contributing to their decision not to have one, by providing one.

I NEVER recommend it, Carol. Never. I do not wish they would at all. I'll read you blog article, but enlighten me? Why would I "wish all sellers" did? If I wished it...it would be so.

Ardell-

Here are some other things that scare off buyers:

1. Providing a copy of agency law.

2. Providing a copy of the seller's disclosure.

3. Telling them the price.

4. Suggesting they get a home inspection before buying a home.

5. Asking them if they have been to a lender to get pre-approved.

Agents should have a frank discussion with their clients and let the client (seller) make an informed decision.

It is my opinion that more information is better for all involved. (The agency law section about dealing honestly and in good faith.)

I think that is better in the LONG TERM for my client to share the home inspection. Scaring off one potential buyer does not breach my duty to my client.

Ardell,

"Are you really suggesting that 98% of the Realtors in this Country are NOT "honest and reputable" IF they don't recommend that the seller do an inspection? Clearly you are a ..."

I don't know where you got the 98% number and that's not even close to what I said or implied. More than half of the honest reputable realtor's & sellers in my area have a pre-listing inspection, if you want a number. The one's who do are seeing a definite increase in the number of offers they receive and less hassle at closing. Furthermore, they are not putting the seller or themselves at risk. Disclose, disclose, disclose.

Have you had a deal fall apart in the 11th hour over an inspection report?

Of course you have. So, wouldn't it be better to know what could potentially create problems up front, instead of at the last minute. Wouldn't it be better to show a property with confidence and portray a image of being 100% upfront, when a buyer looks at the property? If the sellers choose to fix any problems, wouldn't it be better for all involved if the seller had time to make the repairs or get reputable bids from several different contractors, instead of just picking the one who can get to the repairs? The advantages are many.

Yet, many believe that a buyer is going to get an inspection anyway, so why bother. Still many believe that ignorance is bliss. We live in a sue happy society where many are getting sued for their ignorance. The choice is yours, but I firmly believe that a pre-listing inspection is becoming the norm and so is many in the industry. More and more realtors and sellers are realizing the awesome marketing potential a pre-listing inspection has to offer.

Clearly you are a ...

Robert,

Excellent Answer! LOL Even the end line. I love strong debate. We all learn something from it.

ARDELL, You NEVER recommend a pre-listing home inspection? Why wouldn't you? I know you have a good reason, so please enlighten ME.

Do you prefer to know about issues late in a transaction? If you have a good home inspection, doesn't this give comfort to the sellers knowing there will not be any unknown problems related to the home itself to, potentially, delay closing. Or would they just prefer to deal with them later after the buyer's home inspection reveals them? Or, do they hope to get multiple offers and the buyer will waive the home inspection... so their problems (unknown or otherwise) become someone elses?

Still gathering info, Carol. There will be a follow up post.

I'm with Herb so far. Three inspectors find three different lists of things. If you had five inspectors go through and fixed everything on all of them, you wouldn't have a clean report from a sixth you sent in after doing all the repairs from the first five.

I agree different inspectors would find different things but, if worth their salt, ALL would find any big issues to deal with (mold in the attic, electrical issues, open sewer line, blah, blah, blah).

I have never ask a seller to fix EVERY item on the list. We are looking for health, safety and significantly expensive maintenace issues.

Tell me something, Carol. When your sellers fixed everything from the pre-inspection. Did the buyers do a separate inspection that came up clean?

Robert asked: "Have you had a deal fall apart in the 11th hour over an inspection report?"

Rarely, but yes I have. And guess what happened? The second buyer's due diligence (which is not necessarily a single inspector") turned up a real big problem that the first buyer's inspector missed completely and the seller knew nothing about. A cracked sewer line. A regular inspector doesn't do a scope inspection of the sewer line. A regular inspector does not necessarily call asbestos either.

There's a reason why the seller has the responsibility to report everything he knows, and the buyer has the responsibility to do his due diligence to find anything the seller does not know.

If telling a buyer that the inspection was already done, leads the buyer to believe that they don't need to do their due diligence, then the seller may end up being liable for prolems later, that the seller would possibly not be liable for had he not led the buyer's to believe the inspections were already completed.

Tell me Robert, do you EVER have a buyer decide to rely on the seller's inspection, and not their own because the seller already did one?

Ardell,

One of the powers of AR is to allow folks from other regions to read about different practices across the country.

Our "Cost of Repair Contingency" in the standard NC "Offer to Purchase and Contract" allows the Buyer to terminate with return of earnest money if the cost of repairs are estimated by a creditable contractor to exceed a negotiated amount. Doing repairs prior to marketing takes those repair dollars off the contingency table in the deal.

And the Buyer's Inspector would rather look at a home in good repair. They are people too. They respond to a home and convey their impressions through body language and tone. Repaired is better, from what I have seen.

I encourage Sellers to have inspections performed, and to work off all gigs. Let the Buyer thoroughly inspect. Let that inspector see the first report. No big deal. Looking for the win-win.

Mike,

I don't expect some home inspector to waltz in here whith a commercial and suggest that unless you are doing seller inspections you are not an "honest and reputable realtor". I'm sure home inspectors would love for every transaction to hire two inspections. But to suggest that those that do not are not honest is horsepucky.

Lots of opinions, Mike. But Cramer's comment was self serving and offensive. If he were a agent, we could talk about the pros and cons of each. But he's an inspector. It's not always in the best interest of the seller on a house that is really old, and the seller doesn't have the money to do all of the work in advance of listing the property.

What does he care what's best for the seller...that ain' this problem. He does the inspection and leaves.

MAY

2007

Ardell,

I agree- no home inspection prior to listing by the seller. I'm in California where we have more disclosures than we can keep track of and they are mostly about the buyer's due dilengence to get all the inspections their little hearts desire. If I am representing a buyer and the listing agent gives me a home inspection I will give it to the buyer and always recommend they call for their own home inspection.

In some cases, as with an older home, I do like to get a pest inspection. Pest inspectors are licensed by the state and if they miss something, for the most part, they are liable for it. When I get the report I include it and the bid sheet with the TDS and other disclosures in a book for potential buyers to look at when they are shown through the home. If the cost is nominal most sellers will go ahead and have the repairs done and then we have a pest clearance to show the buyer as well as the inspection report. The bonus of getting the repairs done before we start negotiating a sale is that the seller can do the repairs himself or hire someone who can do the work cheaper than what the pest company will. If not, the seller has the option of selling "as is" if the repairs are more costly than what he wants to pay for.

Smart Realtors make sure every possible inspection you can think of is done. Here in Ca. where there's as many attorneys as there are licensed real estate agents if you want to stay out of court you disclose, disclose disclose and make sure everybody knows everything. Defending yourself and your license in court is just not worth the instant gratification of a closed escrow and a commission check in hand to ever hide anything.

Caprice

I am in the camp that favors "pre-listing" inspections. (You might expect that since I am an inspector.) If a property is very well built and maintained, a pre-inspection will highlight that fact to potential buyers. I believe it will attract the attention of high-quality buyers who don't have time to waste on 11th hour games.

I am so convinced that the pre-inspections will create competitive advantage in a buyer's market that I have offered to do several FREE sellers inspections just to prove it. Realtors sound interested, but I never hear back from them. (Actually, I did hear back from one, just today, that one of her sellers is interested, but I'm not sure they will go through with it.) Obviously there's something other than cost that concerns the sellers. THEY DON"T WANT INSPECTIONS, EVEN IF THEY'RE FREE!

I believe this reluctance on the part of sellers creates an even bigger competitive opportunity for any local realtors and sellers willing to employ a "pre-inspected" marketing strategy on high-quality homes.

Time will tell.

David Harkness, P.E.

Consulting Engineer / Inspector

http://homeanalytical.com

JUN

2007

I agree that buyers need to have their own inspection done, but also believe in removing surprises in advance if possible. I always order a pest inspection immediately, both to be able to budget for it, and to get the work scheduled so that it won't hold up closing.

Sometimes things have come up that the sellers have lived with for years, with no knowledge or discomfort - BUT - some of those items are difficult, expensive, or scary to buyers. I would much prefer to provide a copy of a home inspection report (with the seller's statement of what they already fixed, or can't/won't fix) at the beginning of the transaction when everyone can negotiate or walk away easily rather than get a big surprise after the seller has started packing. This report could also be provided to the buyer's home inspector to be able to check that the work was done properly, while they are looking for other items that may have been missed.

This should be used as a supplement to the seller's "Transfer Disclosure Report" but would include more detail than the simple "check the box if it doesn't work" form. This would not replace, but be an addition to the buyer's own professional inspection.

Thanks Vicki. Have you had any experiences with handing a buyer a list of stuff the seller found in an inspection but wouldn't fix? Did it take longer to sell the property? To get an offer? Did the property need a price reduction before you received an offer? Actual experiences with this method?

Appreciated it.

I've had more experience with wishing the sellers had been better prepared for the buyer's inspection! Most inspections don't find disasterous conditions, especially if the seller has been living in it, but for those that do, the seller needs to emotionally and financially be prepared to take care of it.

Actually, I've had some where the original inspector found minor repairs/code violations that the sellers fixed, but also found some code changes since the house was built. In one case, where we didn't have a pre-inspection, the buyer's inspector found that the extensive redwood decking was in violation of building code - that was after the sellers had paid $6,000 for the termite company to repair the dry rotted portion of that deck! A pre-inspection would have saved the seller that $6,000!

Some things need to be addressed, but some others may not be worth fixing for all buyers. Depending on whether the buyer has young children, it may not be necessary to conform to updated building code requiring the pool/spa be fenced seperately, or that stair rails can't be more than 3.5" between rungs. That type of item needs to be fixed or a credit given that will satisfy the particular buyer. For a home that will probably be extensively remodeled, giving a credit or adjusting the price and making it "as is" is usually a better way to handle it.

Here in California, we usually provide all the disclosures upon acceptance of an offer, but a better method is to provide them at the time the buyer agent informs you that the buyer is seriously considering the property. I wouldn't just leave copies sitting around the property for everybody to view, but would fax or email them to the buyer agent before they wrote the offer.

With the Transfer Disclosure Statement, the buyer has 3 days to review and accept it or cancel without penalty. If the disclosures are provided before acceptance, they are included in the offer and accepted at the front end. If there is a hidden defect or condition that would cause the buyer to back out, I would rather not ever open escrow!

Gee - this comment practically turned into it's own post! Hope it makes sense!

Vicki brings up some good points. I don't know about all regions, but home inspections in Texas (and I believe most places) are not "code" inspections. I can easily find "code violations" in almost any house I look at. I do not call out code violations unless 1) Licensing standards require me to, 2) It's a safety issue, or 3) there is serious potential for future damage or risk.

There's a lot of good stuff in the codes, but there are a lot of judgement calls as well. An item in the code may address an issue that is extremely important in Minnesota, but is not really an issue in Texas (or vice versa.) Besides that, a huge number of potential code violations are in areas where a home inspector can't look (inside walls, etc.)

For the most part inspectors want the home to be structurally sound, safe for the occupants, in good condition, and free of nasty surprises for the new owner.

So, if we don't strictly follow the codes, what standards do we follow? States where inspectors are licensed will have some documented Standards of Practice. Also, inspectors who are members of the major professional associations have their own Standards of Practice. From what I've seen, most of these are quite similar. If you're interested in knowing exactly what is and is not required in a home inspection, ask your favorite local inspector for a copy of the Standards of Practice he/she uses. If you happen to be in Texas, you can find them here:

http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=T&app=9&p_dir=N&p_rloc=114564&p_tloc=&p_ploc=1&pg=2&p_tac=&ti=22&pt=23&ch=535&rl=227

David Harkness, P.E.

Consulting Engineer / Inspector

http ://homeanalytical.com

JUN

2007

Part of the problem in different inspectors finding different things is the lack of any true standards. For example, there are at least five national home inspector associations (NACHI, ASHI, SPREI, HIF, NAHI) and probably a state association for all 50 states. Here in California, we have CREIA. While all of them have similar standards of practice and codes of ethics, the fact that we have so many home inspector trade associations should say something about the industry in that it truly is a mess. Instead of home inspectors working together to bring cohesion to the industry, we have five national associations fighting with each other. What good does that do anyone?

Additionally, except maybe in a couple of states, there is nothing that requires home inspectors to join an association, so in addition to those who are members and have standards of practice, you have those who don't have to adhere to anything because they have no standards of practice.

Additionally (yet again), many states still do not have licensing. Without licensing and without the ability for the government to monitor and enforce that licensing (see Pennsylvania), it's just like having no licensing at all.

So I believe that everyone reading this here should write their city, county, state, and U.S. legislative representatives and request licensing and standards for the home inspection industry. That's something that I have done on the first Saturday of each month since August 2001. Have I been successful in getting anything done? Nope. I'm a lone voice in the industry writing letters. However, if we could get the Active Rain community to inundate our representatives with requests, we might get some action. But as long as we have at least six trade associations (five national, one state) and a no-association inspector, it's quite likely that you could have seven different reports from seven different inspectors on the same property.

Now if you want to get the same thing in all the reports from those seven inspectors, make sure they have membership in the same trade association, or no trade association.

While ASHI is the oldest national association (1976) and CREIA is the oldest state association (also 1976), ASHI currently has about 3,800 members according to posts by their members at inspectionnews.com. CREIA has about 1,200 members in California, and NACHI has almost 10,000 members. I have no idea about the other national associations because they don't say.

By the way, my Domestic Partner is a Realtor. I do pre-listing inspections on all his listings. We definitely see less contentious/problematic escrows with those pre-listing properties than other people in his office who try the caveat emptor or ignorance is bliss method. Jim's never had an escrow fall apart while in this slow market others in his office are losing all their escrows. It's a buyers' market here, so anything that Jim can do to show a burning desire to be upfront and work with everyone seems to be extremely beneficial. And I'm definitely not one of your easy-go-lucky inspectors; just ask around!

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